Regional

Turkish firm puts Russian bank up for sale

MOSCOW: Turkish conglomerate Fiba Group has put up for sale a bank it owns in Russia, two banking sources told Reuters, a decision that may be due partly to a row between Moscow and Ankara over the shooting down of a Russian warplane. One of the sources said Fiba Group’s decision to sell Credit Europe bank was prompted by fears among the unit’s senior executives that their Russian entry visas might not be renewed because of the diplomatic dispute.

Turkish aircraft shot the jet down near Syria in late November, with Ankara alleging it had violated Turkish airspace. Moscow denied that, and President Vladimir Putin, accusing Ankara of stabbing Russia in the back, ordered sanctions on Turkey.

A Moscow-based spokeswoman for Credit Europe bank, the biggest Turkish-owned bank in Russia according to data from last year, declined to comment.

Representatives of Fiba Group in Turkey could not immediately be reached for comment.

One of the two sources, an employee at Credit Europe bank, said the lender’s business had struggled with the recession in the Russian economy, but it still made a profit.

“What really pushed [the owners] to leave Russia is a deterioration in Russia-Turkey relations; this is what the top management of the bank told their employees,” the source in the bank said.

Entry visas held by the bank’s non-Russian managers and shareholders will expire this year, and they believe the chance of their being renewed is low, given the political dispute, said the source.

“They realize they will just not be able to come to Russia in order to control their own business here. It is impossible to work in this way.”

The bank would be the most high-profile commercial casualty of the row between Russia and Turkey, which until the Syria conflict were close political and trade partners.

The two countries are on opposing sides of the 5-year-old Syrian war, where Russia’s aerial bombing campaign has tipped the balance in favor of President Bashar Assad’s forces.

Credit Europe was ranked last year as the 53rd-biggest lender in Russia by assets, with capital of around 17 billion rubles ($215 million).

By selling now, the Turkish owners may have to settle for a low price.

The other banking source said Fiba Group was looking to sell Credit Europe bank at around 0.6-0.8 times its capital. Russian banks sold before the country’s economy slowed in 2014 usually had a sale price that exceeded their capital.

Analysts said the planned sale could be complicated by the grim outlook for the Russian economy, which has led to deterioration in banks’ asset quality.

“It is a relatively good bank and is managed quite well,” said Alexander Danilov, senior director for Russian banks at Fitch Ratings.

“However, if there were a sale there are a few issues that could potentially lead to a discount.”

Danilov said roughly half of Credit Europe bank’s retail portfolio was uncollateralized, a high proportion of its corporate loans were denominated in foreign currency and it had significant debts maturing this year.

Nevertheless, a spokeswoman for leading Russian consumer lender TCS Group said the firm would be interested in bidding if the sale went ahead. “Credit Europe is a quality asset, we are interested in it,” she said, adding that TCS had not yet received an official invitation to bid.

 
A version of this article appeared in the print edition of The Daily Star on February 11, 2016, on page 4.

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